Foreclosure flood: 1,000 auctions per day in California

California's foreclosure crisis passed another ominous milestone in April, when more than 1,000 foreclosed homes were  auctioned off every weekday at courthouses across the state, the auction tracking firm ForeclosureRadar reported today.

The April total of foreclosure sales at auction -- 22,838 for the state -- represents a jump of 44% over March totals and the highest level ever in California, ForeclosureRadar reports.

A separate estimate of foreclosures by DataQuick Information Systems had counted 47,171 foreclosures in the first quarter, a rate of more than 500 per day from January to March. The new statistics show every category of foreclosure statistics rose in April.

It appears the pipeline of potential foreclosures is jampacked, too: the ForeclosureRadar reported 44,101 new "Notices of Default" filings in April, a new record for California. Notices of Default are the first step in the foreclosure process.

"We expected a significant increase in auction sales based on previous default patterns," said Sean O'Toole, founder of ForeclosureRadar. "Unfortunately, the continued increases in defaults tell us that the worst is still ahead."

As lenders grow more desperate to avoid taking possession of foreclosed homes, they are offering bigger discounts at courthouse auctions, with "discounts of 40% to 50% from prior sales price common in many parts of the state," ForeclosureRadar reports. Still, the auctions are usually uneventful, and usually do not attract serious bids. "The majority of these sales received no third-party bid and reverted back to the lender despite the largest across-the-board discounts ever offered at trustee sales auctions," ForeclosureRadar reported.

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo: Eviction notice posted in Orange County. Credit: Getty Images

Comments

[tedson]

I looked at foreclosed and short sale houses last week and noticed that the people still living in their houses had pictures of children on their walls.

[Brady Westwater]

My favorite foreclosure - buyer beware - story which goes back to the 1970's, was a house formerly owned by a contractor. If you drove by - it looked perfect. The lawn was bright green and mowed, the flowers along the front walkway in full bloom and the curtains were still in the windows. But when you walked around behind it - he had removed... everything... down to the concrete foundation. All that was left was the front wall - propped up, of course - and nothing else.

But on the good news side, the foundation was broom swept clean.

[Bob Paniagua]

Don’t forget all the stock analysts that were saying this housing market would hit bottom in 6-9 months, that was Sept 2006, and the investors that listened…Hey guys, how’s that working for you? Bush thinks lower interest rates will bring this to an end. The housing market does not have an interest rates problem, it has a problem of fear. And like Gene Foss writes in his posting, the problem is also that people spent not money they made, but money they thought their house was worth, and now they have to pay it back!

[MyLessThanPrimeBeef]

Brady Westwater, I think we should call them Potemkin foreclosures.

[David Raether]

This will continue until home prices achieve some kind of equilibrium with household incomes that matches acceptable debt to income ratios.

Until then... trouble.

[Jess]

what are you guys talkin abt! This thing is over. The housing crisis is over! we've hit the bottom. All these numbers are made up. this is what we all waited for! the "magical bottom". Wait for the crap to fall.
I think I know who Lefty is! His name is ..... .....
CYRIL MOULLE-BERTEAUX and he writes for WSJ check it out!
http://tinyurl.com/63gcjo

[Ria Rhodes who saves by bicycling]

Attention Californians relishing in your joyous schadenfreuden. Yes, people got loans they shouldn't have gotten. Yes, lots of people profited from yet another American scam-o-rama. Does this really surprise anyone?
Ratchet back your mindless consumerism my fellow citizens, adhere to a household budget that makes financial sense, and be thankful the big quake hasn't really given us something to worry about. Have a nice day.

(Ria: Thanks. I too saved today by bicycling to the Big Blue Bus. --Pete)

[TakeFive]

Well this is odd - I'm in agreement with Milla!

How many people actually buy a house, make their payments, and have a mortgage burning party 30 years later? Damn few I’d venture.

I’ve owned 3 homes and 6 loans in the last twenty years. One of the loans was a 30 due in 7, which was predicated on the fact that most real estate turned in 7 years. Owned that property just over 6 years.

I think you need to view the property and the loan as two separate entities. Intertwined no doubt, but distinct.

[JW]

Sounds like the poster, "Rita" must be Barney Franks sister. I can hear her bleeding heart just pumping away with her remarks about mean posters on this forum. Waaaaaaaaaaaaaa! Booooo hoooooooo!

[Milla]

Fiver: you actually agree with me?!?! this could be the start of a revolution or maybe a signal that the end is nigh. i feel the polarity of the poles reversing! still, you posted this in the wrong thread, man, though that's kinda nice since more people get to read it.
:-D

(@ Milla from Pete: It's so nice to see you kids getting along for once)

[Agnostic Free Thinker]

I agree with the posters that are opposed to a government bailout of homeowners that are facing foreclosure. Let the buyer beware -- when people are taking out a mortgage and buying a house, they have an obligation to be fully informed about what they are signing up for. Stupidity and ignornace cannot be used as an excuse. It is up to the potential homeowner to understand how much of a mortgage they can afford to take on. Live within your means, people; actually, you should live below your means.

[Cal]

TakeFive:"How many people actually buy a house, make their payments, and have a mortgage burning party 30 years later? Damn few I’d venture"

Considering the decline in the market that has come and the obvious future decline that is coming I think people buying a house now not expecting to stay in for at least 10 yrs (and I truely believe this to be very optimistic) are only going to exiting that home through digging into their pockets or short sale or foreclosure.

I absolutely believe we will not see REAL (inflation adjusted) prices like we saw during the boom in our lifetimes. The question then becomes when will we see inflation adjusted prices at the same level we see now and that will depend on how far down the slope we go.

[ed]

to sharon burton.......................I know the feeling. Bought for 250k, did a refi to 300k when the apprassors and loan guy said it was worth 410k. Decided I dont need to suck out that much equity and of course I knew that there was no way my home would drop more than 100k. Last BANK SALE in my condo complex was for $199,000.00. No plans to move but around 15% of the units are empty and my lesson is when you buy a home its called a home, when you buy a rental its called an investment. And the two should never be confused for the same thing.

[Joseph...The Real Estate Guy]

Things are not looking good!

[jag]

Rita, are you upside down on your mortgage? You sound like a bitter homeowner. Not all comments posted here are bad. Look for Lefty's comments. Lefty usually encourages people to buy in Metro L.A. for the past year or so.

[Nelcisco]

well said David Raether

[Milla]

Pete: if you could negotiate a peace treaty between shockg and Laker, i would nominate you for a Nobel Peace Prize. even the middle east has seen some cease-fires. anything is possible!

(@ Milla from Pete: Only one person has the optimism to even try to bring them to the negotiating table. I speak of course of Lefty)

[Ace]

TakeFive:"How many people actually buy a house, make their payments, and have a mortgage burning party 30 years later? Damn few I’d venture"

How many people are going to enter retirement with a mortgage? Almost everyone. How many people are going to KEEP their house when they retire? Almost no one. No pension. Little to no social security. That 3 percent you saved in your 401k isn't going to do it. You will be selling your house and living in a trailer.

It doesn't matter if you move up in house every 5 years as long as you can pay off your house before retirement.

[Ace]

Cal,

Thanks for the podcast link. It was a good listen.

[IToldu2CashOut]

Dear Foreclosed Home Owner,

Yes we have no sympathy for you at all. We view you as irresponsible and at fault for this mess by driving up prices when if you had just been patient and sensibly saved you probably could have bought in a few years like we are going to do. We rented and saved, you rented from the bank and spent spent spent money that wasn't yours and was not earned. You told us how foolish we were at party's and bragged about all the money you were making and would be making forever into the future off your house made of CA gold, while we would be priced out forever. We told you it was a house of cards and that you should cash out while you still can. You told us things like "keep saving your pennies". We were right, but your recklessness hurt us not only by driving prices so high only an idiot could think it was real, but also those of us who didn't see it coming may have seen a 20% drop in their stock portfolio's directly effecting many peoples retirement. Now you cry to the government that you were tricked and that you need to be rescued to continue your lifestyle that of course you are entitled to. We see ourselves possibly being on the hook for a trillion dollars of your waste and greed because for some reason the media sees your case but not our side of the case. Possibly because you and wall street are doing such a good job of taking down the entire financial system that they only way out is to print more money and make inflation go through the roof. Instead of just admitting you a bad financial decision and finally owning up to what you have done you continue to blame everyone but yourself and cry about how the bank has cut of your home equity line of credit. How dare they stop giving away free money to people who have no way of paying it back!

So yeah we don't have much sympathy for you. Sorry. Please take your pictures of your kids out of our house so we don't have to see them when we move in.

[IToldu2CashOut]

P.S. Stop comparing yourself to earthquake victims who died through no fault of their own. You lost a "thing...a possession". They lost their lives. When something really bad happens to you we will feel bad.

[Gene Foss]

Hey Paul H.,
I'm no whiz kid but everything I got is paid for! Oh my God, so un-american. I've been thru 3 of these R.E devaluations in my lifetime. This one may drop us down to the 2nd great depression, who knows. And your right, I am going to pay for these idiots that think money is magic w/ R.E. I guess I'm really old fashioned. You produce something, then you sell it at a profit. I've been doing that my whole life and it has worked quite well.

[Sandra V]

The people who are upside down are now going out and buying new houses at significantly reduced prices. Then they let their first house go to foreclosure, the lender never comes back, and the homeowners gets away with it. Lenders need to be as aggressive as possible with people who let their houses go. They need to garnish wages and chase the defaulting homeowners until the cows come home.

I live in Northern LA County as this is the trend that friends and neighbors have found. Same as the late 80s early 90s

[Rita]

Dear Gene,
Yes you, like me are old fashioned. You are intelligent.
from another paid/off home-owner,
and compassionate person.
Evidently a rarity among the mediocre
hateful writers on this blog.

[DF]

The ill will in this thread is understandable to an extent. If I'd sunk a huge percentage of my equity into real estate that was now worth far less than I'd expected, I'd be upset as well.

On the other hand, ed's comment illustrates what good may come out of the housing crash: we may start looking at homes as homes again, and not as get-rich-quick schemes or ATMs. And unless you're very risk-tolerant or have some unusual insight into the market, this is probably the best approach.

I moved back to LA last year and felt a lot of pressure to buy from a realtor who made the (incredibly misleading) case that real estate always goes up, and that squeezing into a tiny condo in WeHo was the best move lest I wait and be priced out of homeownership forever. It seemed exciting to be part of the LA real estate market, and to be able to leverage myself into a half-million dollar property that, if it appreciated, would generate more raw cash than any mutual fund ever could. But the whole deal smelled funny to me, and ultimately I couldn't pay that much for a place I wasn't particularly excited about, especially when the market was just beginning to turn.

In the year since then, I've been very relieved that I decided to rent. I was lucky to an extent; if I hadn't gotten sound advice (other than from the RE agent) and had the luxury to take time to look around, I might have found myself in a mediocre condo with an upside-down mortgage. This wasn't prescience, it was simply being risk-averse at the right time. But I have given up the idea that I had back then that I could ride the real estate wave to untold riches. My approach to buying a place now is simple: wait until prices decline to something that approaches market fundamentals (measured by price/income ratio, case-shiller index), and even then buy only when it's reasonably affordable.

This is a long-winded way of basically repeating ed's pithy insight: the house you live in is primarily a home, not an investment. It's a less exciting but much more realistic way to look at real estate.